NATIONAL LABOR RELATIONS BOARD, PETITIONER V. ACTION AUTOMOTIVE, INC. No. 83-1416 In the Supreme Court of the United States October Term, 1984 On Writ of Certiorari to the United States Court of Appeals for the Sixth Circuit Reply Brief for the National Labor Relations Board 1. Respondent contends (Br. 19-22) that the exclusion of the children or spouse of an employer from the definition of "employee" in Section 2(3) of the Act, 29 U.S.C. 152(3), precludes the Board from excluding "solely on the basis of their family ties" other employee-relatives from bargaining units under Section 9(b) of the Act, 29 U.S.C. 159(b). As we pointed out in our opening brief (at 25-26), Section 2(3) places designated relatives of employers wholly outside the Act's protections, but it says nothing about how the Board should exercise its discretion in defining bargaining units with respect to other relatives who are "employees" within the Act's coverage. Respondent concedes (Br. 26), as did the court of appeals (Pet. App. 3a-5a), that relatives, not excluded from the Act under Section 2(3), may be excluded from bargaining units if job-related factors preclude the existence of the requisite community of interest. Respondent asserts (Br. 22-26), however, that the Board's test is not an application of the community of interest standard, but is a per se exclusion based on nothing more than family relationship. This contention is without merit. The Board's current policy does not exclude employee-relatives on the basis of family relationship alone; rather the Board, in response to NLRB v. Caravelle Wood Products, Inc. (Caravelle I), 466 F.2d 675 (7th Cir. 1972), now considers not only the family relationship (which is the sole basis for exclusion under Section 2(3)), but also any other relevant circumstances in determining whether the interests of employee-relatives are distinct from those of other employees. /1/ Although job-related factors are the most common criteria for determining whether employees share sufficient interests to be grouped in the same bargaining unit under Section 9(b), there is no basis for concluding that they are the only relevant factors. /2/ As we explained in our opening brief (Br. 16-22), the Board's current family exclusion rule further the basic policies underlying the Board's community of interest doctrine because it fosters efficient collective bargaining relationships, protects the Section 7 rights of employees, and maintains a proper line between management and labor. /3/ 2. Respondent's contention (Br. 39-40) that the Board's family exclusion policy impermissibly involves the Board in vague, subjective considerations of employees' personal lives and motivations misconceives the Board's policy as applied. The Board does not base its decision on speculation as to the possible subjective effects of a family relationship on the employee-relative's willingness to participate in union activity. Instead, the Board's determination is based on objective factors drawn from Caravelle I, which are designed to determine whether an employee-relative is more closely aligned with management than with unit employees. Although these factors focus on circumstances surrounding the family relationship such as the extent of the family's ownership, the position of the owner or manager in the business, and the financial and living arrangements between the owner and the employee-relative, these factors are no less objective than any other factors relevant to a community of interest analysis, including job-related factors. The Board does not inquire into any employee-relative's state of mind in making its findings concerning the community of interest of the employees. /4/ Nor is there merit to respondent's contention (Br. 26-30) that the Board's family exclusion policy impermissibly substitutes the Board's "expertness" for evidence that employee-relatives lack a community of interest with members of the unit. In shaping appropriate bargaining units in this area, the Board examines the objective facts concerning family relationships on the record before it and draws a reasoned conclusion from the record evidence as to whether employee-relatives are aligned with management so as to warrant their exclusion from a unit or share a community of interest with unit employees and therefore should be included. It is well settled that the Board, as an administrative agency in a specialized field, is entitled to draw on its experience in making factual inquiries and to draw reasonable inferences from the facts presented, Radio Officers v. NLRB, 347 U.S. 17, 48-50 (1954), which is precisely what it did in this case. See NLRB v. Seven-Up Bottling Co., 344 U.S. 344, 348-349 (1953). /5/ 3. Finally, respondent's contention (Br. 36-37) that the Board's family exclusion policy is "unnecessary" because unions independently have authority to exclude employee-relatives from their ranks is beside the point. It is the Board's function in shaping appropriate bargaining units pursuant to Section 9(b) of the Act to promote efficient collective bargaining and to protect the rights of employees to self-organization and freedom of choice by eliminating conflicts among unit employees that might impair the collective bargaining process and by preserving the distinct line between labor and management. To the extent that a union would be inclined to exclude certain employee-relatives from membership in order to ensure cohesion in its ranks, that is simply further evidence that in some cases such employee-relatives have interests distinct from other employees and therefore should be excluded from the bargaining unit by the Board. /6/ For the foregoing reasons, and the reasons stated in our opening brief, the judgment of the court of appeals should be reversed. Respectfully submitted. REX E. LEE Solicitor General WILFORD W. JOHANSEN Acting General Counsel National Labor Relations Board OCTOBER 1984 /1/ As we stated in our opening brief (at 14), the primary factors the Board considers are (Caravelle I, 466 F.2d at 679): (H)ow high a percentage of stock the parent or spouse owns, how many of the shareholders are related to one another, whether the shareholder is actively engaged in management or holds a supervisory position, how many relatives are employed as compared with the total number of employees, (and) whether the relative lives in the same household or is partially dependent on the shareholder. Respondent cites Caravelle I, supra (Br. 21-22) for the proposition that Section 2(3) precludes the Board's family exclusion rule without acknowledging that it is the very rule suggested in Caravelle I that the Board has adopted and applied in this case. /2/ Respondent's reliance (Br. 24-25) on NLRB v. Yeshiva University, 444 U.S. 672 (1980), is misplaced. In Yeshiva, this Court held that because of their job duties and responsibilities certain full-time college faculty members were managerial employees, and hence outside the scope of the Act. Nothing in Yeshiva suggests that job-related factors are the only permissible considerations that may enter into a Board determination whether certain employees share a sufficient community of interest to be grouped in the same bargaining unit with other employees. /3/ Respondent's claim (Br. 14-19) that the Board, since adopting the Caravelle criteria, has failed to maintain a consistent approach to employee-relative exclusions is erroneous. As we explained in our opening brief (at 14-15), in applying the factors drawn from Caravelle I, the Board typically excludes, as it did in this case, employees who live with or are otherwise financially dependent on a relative who owns or actively manages the business, particularly where other owners of the business are related to each other and to the employee-relative whose status is at issue. Where, on the other hand, application of the Caravelle criteria shows that an employee-relative is not aligned with management by virtue of the family relationship, the existence of a special job status is necessary before the Board will conclude that the employee-relative lacks the community of interest shared by unit employees. The Board thus excludes relatives of low-level managers with little or no ownership interest in the business only where special job status is shown. Contrary to respondent's assertion, there is no inconsistency between concluding in some cases that employee-relatives do not share a community of interest with other employees on the basis of the Caravelle factors, and requiring further evidence, such as special job status, in other cases where the Caravelle factors alone are not sufficient to establish lack of a community of interest. The cases cited by respondent (Br. 17-18 & nn. 3-4) merely reflect the application of these principles; indeed, we cited many of the same cases in our opening brief (Br. 14-15 & nn. 6, 8) to illustrate these basic principles. /4/ In our opening brief, we anticipated (at 19 n.10) respondent's contention (Br. 31-36) that the Board impermissibly excludes employee-relatives solely on the basis of their probable opposition to a union in an election. Although employees who lack a community of interest with others on the basis of the Caravelle factors may well oppose a union when others favor it, the opposition is merely a consequence of the divergent interests, and is not itself a basis for the employee's exclusion from the unit. Rather, the exclusion is designed to obviate conflicts within the unit that could harm the bargaining process and to protect the interests of both unions and employers (Br. 17-21). Nor is there substance to respondent's contention (Br. 39-40) that allowing the Board to include family relationships as a factor in making unit determinations would turn unit determination proceedings into a "hopeless morass." The Board has been considering that factor for many years without any evidence of a serious administrative problem. In any event, the determination of whether the inquiry is unmanageable is a matter that the Board is in the best position to evaluate. /5/ Respondent's reliance (Br. 28-29) on the legislative history of the Taft-Hartley amendments to suggest that the Board may not rely on its experience and judgment in drawing inferences and conclusions from the evidence before it is totally misplaced. This Court rejected the identical argument in Radio Officers v. NLRB, 347 U.S. at 50 (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)), stating that the amendments were not "'intended to negative the function of the Labor Board as one of those agencies presumably equipped or informed by experience to deal with a specialized field of knowledge, whose findings within that field carry the authority of an expertness which courts do not possess and therefore must respect.'" /6/ Equally off the mark is respondent's claim (Br. 38-39) that, by excluding employee-relatives who may perform the same work as bargaining unit employees, the Board jeopardizes the jobs of the employee-relatives by creating a situation in which a union could demand during the ensuing collective bargaining that only unit employees perform unit work. Of course, such a demand, even if made, would not necessarily cause anyone to lose his job; management does not have to accede to the demand. Moreover, respondent's point applies whenever the Board excludes employees on the ground that they receive special compensation or benefits for the same work as unit employees, an exclusion that respondent concedes (Br. 26) is permissible under traditional community of interest principles.